Wendy's 2011 Annual Report Download - page 54

2010 Compared with 2009
(The Wendy’s Company)
Cash provided by operating activities decreased $68.9 million during the year ended January 2, 2011 as
compared to the year ended January 3, 2010 primarily due to the following:
• a $75.2 million net decrease in accrued expenses and other current liabilities for the comparable periods. The
net decrease was primarily due to the following: (1) an increase in amounts paid under incentive
compensation plans in 2010 versus 2009 for fiscal 2009 and fiscal 2008, respectively, combined with a
decrease in the amounts accrued in 2010 as compared to 2009 due to lower operating performance, (2) the
payment of start-up costs to QSCC in 2010 which were accrued in 2009, and (3) interest payments in 2010
primarily resulting from interest payments in January and July 2010 on the Senior Notes and a decrease in
interest expense due to the redemption of the Wendy’s 6.25% senior notes in the second quarter of 2009,
partially offset by an increase in interest expense accruals on the Senior Notes issued in June 2009. The net
decrease in accrued expenses and other current liabilities was partially offset by the effect of the income tax
benefit recorded in 2010 as compared to the provision for income taxes recorded in 2009 primarily due to
variations in (loss) income before income taxes of our subsidiaries in 2010 and 2009;
• $12.7 million decrease in impairment of long-lived assets due to the level of impairment charges taken in
prior periods; and
• $8.1 million decrease in depreciation and amortization primarily due to an adjustment of $6.5 million in the
prior year for a one-time increase in depreciation as a result of refinements to the purchase price allocation
(including long-lived assets) for the merger with Wendy’s;
partially offset by the following:
• a $37.7 million favorable impact in accounts payable resulting from a decrease in accounts payable of $15.8
million during the year ended January 2, 2011 compared to a decrease in accounts payable of $53.5 million
during the year ended January 3, 2010. The changes for the comparable periods were primarily due to the
following: (1) a decrease in the 2009 amounts payable for non-recurring items more typically included in
accrued expenses rather than accounts payable with no comparable amounts in 2010, (2) a decrease in the
volume of transactions processed as received from third parties, due in part to the decrease in sales in 2010 as
compared to 2009, (3) a reduction in amounts paid to the Wendy’s national advertising cooperative in 2010
as compared to 2009 due to changes in the timing of royalty payments to them and a shift of product testing
to the advertising co-op, and (4) amounts paid in 2009 associated with certain outstanding 2008 lease
payments which did not recur in 2010.
(Wendy’s Restaurants)
Cash provided by operating activities decreased $90.4 million during the year ended January 2, 2011 as
compared to the year ended January 3, 2010 primarily due to the following:
• a $81.8 million net decrease in accrued expenses and other current liabilities for the comparable periods. The
net decrease was primarily due to the following: (1) an increase in amounts paid under incentive
compensation plans in 2010 versus 2009 for fiscal 2009 and fiscal 2008, respectively, combined with a
decrease in the amounts accrued in 2010 as compared to 2009 due to lower operating performance, (2) the
payment of start-up costs to QSCC in 2010 which were accrued in 2009, and (3) interest payments in 2010
primarily resulting from interest payments in January and July 2010 on the Senior Notes and a decrease in
interest expense due to the redemption of the Wendy’s 6.25% senior notes in the second quarter of 2009,
partially offset by an increase in interest expense accruals on the Senior Notes issued in June 2009. The net
decrease in accrued expenses and other current liabilities was partially offset by the effect of the income tax
benefit recorded in 2010 as compared to the provision for income taxes recorded in 2009 primarily due to
variations in (loss) income before income taxes of our subsidiaries in 2010 and 2009;
• $28.9 million related to a decrease in amounts accrued in 2010 versus 2009 for Federal and state income
taxes under a tax sharing agreement with The Wendy’s Company, partially offset by 2009 tax payments
made to The Wendy’s Company under this agreement;
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